IG Group, the world’s biggest spreadbetter, has warned sluggish trading could
slow its growth despite enjoying a 17pc rise in sales last year.

In 2011, IG enjoyed record trading volumes driven by retail clients piling into stocks hit by the eurzone crisis, especially in August and September.

IG Group Holdings

Adjusted pre-tax profits, which excludes charges on the purchase of its Japanese business, rose 14pc to £185.7m in the year to May 31, on revenue of £366.8m.

But in recent months, net trading revenue has been down as market volume and volatility has dropped.

“It is a bit dull,” said chief executive Tim Howkins. “Our clients trade on very short term movements so volatility is a good thing for them. They want to see a clear pattern and they are looking for momentum. If it is easy to see those things then our trading goes up.”

The daily mean trading value fell from £1.45m in the first half of the year to £1.32m in the last six months to May 2012.

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Spread betting involves making a bet on whether stocks, market indices, or foreign exchange rates go up or down, so clients benefit from trading long positions as well as shorting stocks and indexes.

IG customers, who are typically men in their mid 30s and 40’s with professional jobs who want to actively play the market, can also trade derivative products such as contracts for difference, which allow traders to borrow shares with leverage to speculate on whether the price will go up or down.

Numis analyst James Hamilton said despite the current slowdown in trading volumes, he still believed in IG’s “growth potential” which consensus suggests will grow 2-3pc next year.

Mr Hamilton pointed to the high barrier to entry for IG’s rivals – such as in trading on mobile phones – which he said IG were “best in class” at. Almost 43pc of IG’s customers used one of IG's mobile apps, accounting for 20pc of all IG’s transactions.

The company also said it expected better results from its foreign exchange division, FX Online. The company was bought for £140m four years ago, but was written down to zero on IG’s balance sheet after, after crippling regulation demanded strict limits on leverage.

“Revenues reduced by half,” said Mr Howkins. “But we are now coming to the one year anniversary of the last bit of regulation so we expect revenues to stabilise and even to grow.”

Revenue in the UK, which is IG's largest market, rose 15pc to £191.8m. It increased 26pc in Europe to £72.2m and 22pc in Australia to £58m.

Against this backdrop, IG Group expects revenue this year to be "more weighted towards the second half than historically", although it said that "under normal market conditions" it expects "modest growth in revenue for the year as a whole".

A final 16.75p a share dividend will be paid on October 23, up from 14.75p last year. This takes the total dividend for the year to 22.5p, a rise of 12.5pc.